Market Rebounds on Weak Volume

On Monday, the market opened up and rose off the open, then settled into a sideways consolidation for the remainder of the day. The Nasdaq gained +34 points (+0.81%), the S&P rose +17 points (+0.96%), and the Dow climbed +181 points (+1.13%). 

Advancers beat decliners by a ratio of 1.5 to 1 while up volume outpaced down volume by 3.2 to 1. However, the volume today was lighter than Friday's volume, and this implies that, despite the up day, the bulls did not demonstrate enough strength to reverse the short-term decline. 

Both the Nasdaq and S&P remain at or below their respective 10 SMAs. A failure to push through the moving average on strength would set up the market for another potential correction. On the other hand, if both indices fall to their 50 EMAs on weaker volume, then it could set up a market rebound. 

Daily ADX on the Nasdaq has fallen to 21 (weak), something which generally leads to a trading range or retracement.The +DMI is still on top, so there has not been a change of dominance from +DMI to -DMI. When the ADX is low, reading momentum becomes less reliable, so reading price/volume action at support and resistance levels become more important.